You are here: Home - Saving & Banking - News -

Brits’ savings pots hit new record high

Written by:
The amount of money available to households to stash away in savings hit a new record high last year, new data from the Office for National Statistics has revealed.

The ONS defines the saving ratio as the amount of money households have available to save as a percentage of their gross disposable income, plus any money coming in from pensions.

And according to its latest figures, this ratio jumped to 16.1% in the final quarter of 2020. That’s up from the 14.3% recorded in quarter three.

For 2020 as a whole, the savings ratio grew to a record high of 16.3%, a significant increase from 6.8% recorded in 2019.

Separate data from the Bank of England this week suggested that households are actively stashing away this available cash, with UK households saving £17bn into cash accounts in February. 

As a result, the total saved since last March has hit £180bn, an enormous jump from the £56bn saved in the 12 months prior.

A study last month found that the average lockdown saver has put away £1,085 since the crisis first struck.

Building up a rainy day fund

Kat Mann, savings and investment specialist at Nutmeg, noted that household spending had been stifled by shutdowns of hospitality, retail and travel, so it was little wonder that savings for those able to keep their jobs had hit record highs over 2020.

She continued: “The pandemic has provided an opportunity for those in this fortunate position to think more closely about their spending, saving and investment habits. It’s critical that this group doesn’t miss the chance to build up a rainy day fund, whether it be to guard against unexpected future shocks or to pay off debts; this will serve them well beyond Covid.”

Previous research has found that as many as one in five households had no emergency savings they could turn to when the pandemic struck.

What happens to those savings next?

Melissa Davies, chief economist at Redburn, argued that the “evolution” of these savings will be key to what the economic recovery of 2021 looks like. For example, if they lead to big spending once lockdown ends then it would “turbocharge” the recovery, while more cautious behaviour from savers would limit that recovery.

Davies added: “We would argue that the unequal distribution of savings will lead to much of the excess finding its way into investments, and that it is unlikely to be spent on social consumption in the recovery. Higher household savings are here to stay.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week